FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter ended March 31, 1998
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Commission file number 0-14269
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SIERRA PACIFIC PENSION INVESTORS `84
(A LIMITED PARTNERSHIP)
State of California 33-0043952
- ---------------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
5850 San Felipe, Suite 450
Houston, Texas 77057
- -------------------------------------------- --------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (713) 706-6271
-------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No__.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are submitted in the next pages:
Page
NUMBER
Balance Sheets - March 31, 1998 and December 31, 1997 4
Statements of Operations - For the Three Months Ended March 31, 1998 and
1997 5
Statements of Changes in Partners' Equity - From June 5, 1984 (inception
of the Partnership) to December 31, 1997 and for the Three Months Ended
March 31, 1998 6
Statements of Cash Flows - for the Three Months Ended March 31, 1998 and
1997 7
Notes to Financial Statements 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(a) OVERVIEW
The following discussion should be read in conjunction with the Partnership's
Financial Statements and Notes thereto appearing elsewhere in this Form 10-Q.
The Partnership currently owns one property, Sierra Valencia. In addition, the
Partnership holds a 66.26% interest in Sierra Mira Mesa Partners ("SMMP").
(b) RESULTS OF OPERATIONS
Rental income for the first three months of the year decreased by $4,000, or 3%,
when compared to the corresponding period in the prior year. This decrease was
principally the result of billing credits given to tenants in March 1998 due to
common area maintenance fees being lower than anticipated in the prior year. The
Property was 100% occupied at March 31, 1998.
2
<PAGE>
Operating expenses for the three months ended March 31, 1998 increased by
$44,000, in comparison to the corresponding period in the prior year,
principally due to data processing and accounting and auditing costs incurred
during the quarter. Similar costs were accrued in the second quarter in the
prior year.
Depreciation and amortization expenses for the three months ended March 31, 1998
increased by $8,000, or 12%, when compared to the corresponding period in 1997,
primarily due to additional capitalized tenant improvements and loan costs.
The Partnership recognized interest expense in the amount of $38,000 for the
three months ended March 31, 1998. Two loan agreements were entered into by the
Partnership in the prior year. The loans are secured by the Sierra Valencia
property. The Property was previously unencumbered.
The Partnership's share of income (loss) from investment in SMMP was $81,000 for
the three months ended March 31, 1998 compared to ($66,000) for the same period
in the 1997. The Partnership overstated its share of unconsolidated joint
venture loss $76,000 in the prior year. An adjustment was recorded in 1998.
Further, SMMP generated income during the quarter primarily due to a decrease in
its share of loss from Sierra Vista Partners, which owned the Sierra Vista
property. The Sierra Vista property was sold in October 1997.
(c) LIQUIDITY AND CAPITAL
During 1997, the Partnership entered into two loan agreements totaling
$1,604,000. The loans are secured by the Sierra Valencia property. The proceeds
of these loans were primarily used to satisfy the liquidity requirements of
SMMP.
As of March 31, 1998, the Partnership is in an illiquid position. Total cash and
billed receivables amount to $17,000 compared to $157,000 of accrued and other
liabilities. The Partnership anticipates cash required to meet debt obligations
and for the construction of new tenant space will be funded from the operations
of the Property.
3
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A Limited Partnership)
BALANCE SHEETS
March 31, 1998 and December 31, 1997
March 31, December 31,
1998 1997
----------- -----------
ASSETS
Cash and cash equivalents ............................ $ 16,978 $ 27,154
Receivables:
Note receivable, net of deferred gain of $215,786 . 2,005,498 2,005,498
Unbilled rent ..................................... 44,330 45,846
Billed rent ....................................... 0 4,186
Other ............................................. 55,532 0
Due from affiliates .................................. 14,466 47,466
Income-producing property - net of
accumulated depreciation and valuation
allowance of $3,604,663 and $3,557,364,
respectively ....................................... 1,321,507 1,372,623
Investment in unconsolidated joint venture ........... 6,800,094 6,720,551
Other assets ......................................... 289,437 251,676
----------- -----------
Total Assets ......................................... $10,547,842 $10,475,000
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accrued and other liabilities ........................ $ 157,324 $ 108,044
Notes payable ........................................ 1,543,234 $ 1,562,134
----------- -----------
Total Liabilities .................................... 1,700,558 1,670,178
----------- -----------
Partners' equity:
General Partner .................................... 0 0
Limited Partners:
80,000 units authorized,
77,000 issued and outstanding .................... 8,847,284 8,804,822
----------- -----------
Total Partners' equity ............................... 8,847,284 8,804,822
----------- -----------
Total Liabilities and Partners' equity ............... $10,547,842 $10,475,000
=========== ===========
Unaudited
See Accompanying Notes
4
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1998 and 1997
1998 1997
--------- ---------
REVENUES:
Rental income .................................... $ 121,168 $ 125,337
Interest income .................................. 55,534 48,457
--------- ---------
Total revenues .......................... 176,702 173,794
--------- ---------
EXPENSES:
Operating expenses ............................... 112,319 68,115
Depreciation and amortization .................... 64,343 55,921
Interest expense ................................. 38,127 1,804
--------- ---------
Total costs and expenses ................ 214,789 125,840
--------- ---------
(LOSS) INCOME BEFORE PARTNERSHIP'S
SHARE OF JOINT VENTURE INCOME (LOSS) ............. (38,087) 47,954
PARTNERSHIP'S SHARE OF UNCONSOLIDATED
JOINT VENTURE INCOME (LOSS) ...................... 80,549 (66,499)
--------- ---------
NET INCOME (LOSS) .................................. $ 42,462 $ (18,545)
========= =========
Net income (loss) per limited partnership unit ..... $ 0.55 $ (0.24)
========= =========
Unaudited
See Accompanying Notes
5
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
From June 5, 1984 (Inception of Partnership) to December 31, 1997
and for the Three Months Ended March 31, 1998
<TABLE>
<CAPTION>
Limited Partners Total
---------------------- General Partners'
Per Unit Total Partner Equity
--------- ------------ ------------- -----------
<S> <C> <C> <C>
Proceeds from sale of
partnership units ................. $ 250.00 $19,418,250 $ 19,418,250
Underwriting commissions
and other organization expenses ... (37.34) (2,894,014) (2,894,014)
Repurchase of 665 partnership units (0.03) (151,621) (151,621)
Cumulative net (loss) income
(to December 31, 1997) ............ (76.85) (5,917,787) $ 133,334 (5,784,453)
Cumulative distributions
(to December 31, 1997) ............ (21.43) (1,650,006) (133,334) (1,783,340)
------- ---------- ------------ -----------
Partners' equity - January 1, 1998 114.35 8,804,822 0 8,804,822
Net income .......................... 0.55 42,462 42,462
------- ---------- ------------ -----------
Partners' equity - March 31, 1998 ... $ 114.90 $ 8,847,284 $ 0 $ 8,847,284
======= =========== ============ ===========
</TABLE>
Unaudited
See Accompanying Notes
6
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1998 and 1997
1998 1997
-------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ........................... $ 42,462 $ (18,545)
Adjustments to reconcile net income (loss)
to cash used in operating activities:
Depreciation and amortization ............. 64,343 55,921
Undistributed (income) loss of
unconsolidated joint venture ............ (80,549) 66,499
Decrease in rent receivable ............... 5,702 3,585
Increase in other receivables ............. (55,532) 0
Increase in other assets .................. (49,982) (160,968)
Increase in accrued and other liabilites .. 49,280 16,551
-------- ------------
Net cash used in operating activities ..... (24,276) (36,957)
-------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property additions ........... 0 (5,012)
Capital contributions to unconsolidated
joint venture ........................... 0 (1,311,300)
-------- ------------
Net cash used in investing activities ..... 0 (1,316,312)
-------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Funding of note payable secured by property 0 1,404,000
Principal payments on notes payable ....... (18,900) 0
Repayment of loans to affiliate ........... 0 1,311,300
Loan from affiliate ....................... 33,000 0
Loan to affiliate ......................... 0 (458,000)
-------- ------------
Net cash provided by financing activities . 14,100 2,257,300
-------- ------------
NET DECREASE (INCREASE) IN CASH
AND CASH EQUIVALENTS ....................... (10,176) 904,031
CASH AND CASH EQUIVALENTS - Beginning of period 27,154 42,060
-------- ------------
CASH AND CASH EQUIVALENTS - End of period ..... $ 16,978 $ 946,091
======== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest .. $ 38,233 $ 1,804
======== ============
Unaudited
See Accompanying Notes
7
<PAGE>
SIERRA PACIFIC PENSION INVESTORS `84
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------
1. BASIS OF FINANCIAL STATEMENTS
In the opinion of the Partnership's management, these unaudited financial
statements reflect all adjustments which are necessary for a fair presentation
of its financial position at March 31, 1998 and results of operations and cash
flows for the periods presented. All adjustments included in these statements
are of a normal and recurring nature. These financial statements should be read
in conjunction with the financial statements and notes thereto contained in the
Annual Report of the Partnership for the year ended December 31, 1997.
2. RELATED PARTY TRANSACTIONS
In 1994, all of the common stock of TCP, Inc. was purchased by Finance Factors,
Inc. from Carlsberg Management Company ("CMC"). TCP, Inc. owns all of the common
stock of S-P Properties, Inc., the General Partner of the Partnership. CMC
continued to manage the affairs of the Partnership through June 30, 1995.
Included in the financial statements for the three months ended March 31, 1998
and 1997 are affiliate transactions as follows:
March 31
--------------------------
1998 1997
------------- ------------
Management fees $ 4,298 $ 5,536
Administrative fees 16,401 12,810
Construction supervision fees 0 5,012
3. INVESTMENT IN UNCONSOLIDATED JOINT VENTURE
Sierra Mira Mesa Partners ("SMMP") was formed in 1985 between the Partnership
and Sierra Pacific Development Fund II ("SPDFII"), an affiliate, to develop and
operate the real property known as Sierra Mira Mesa, an office building, located
in San Diego, California. The Partnership's initial ownership interest in SMMP
was 49%; the remaining 51% was owned by SPDFII. Effective December 31, 1996, the
general partners amended the partnership agreement to allow for adjustments in
the sharing ratio each year based upon the relative net contributions and
distributions since inception of each general partner. At March 31, 1998 the
Partnership's interest in SMMP was 66.26%; the remaining 33.74% interest is
owned by SPDFII.
UNAUDITED
8
<PAGE>
Sierra Pacific Pension Investors '84
Notes to Financial Statements
Page two
The consolidated financial statements of SMMP include the accounts of SMMP and
Sorrento I Partners, a majority owned California general partnership. Summarized
income statement information for SMMP for the three months ended March 31, 1998
and 1997 follows:
March 31
----------------------------
1998 1997
-------------- -------------
Rental income $ 482,917 $ 481,365
Total revenues 534,154 523,937
Operating expenses 206,776 167,018
Share of unconsolidated
joint venture loss 57,843 134,559
Net income (loss) 5,549 (101,246)
As of March 31, 1998, SMMP holds a 33.55% interest in Sorrento II Partners
("SIIP"), a California general partnership with Sierra Pacific Institutional
Properties V formed in 1993; a 9.33% interest in Sierra Creekside Partners
("SCP"), a California general partnership with Sierra Pacific Development Fund
formed in 1994; and a 34.51% interest in Sierra Vista Partners ("SVP"), a
California general partnership with Sierra Pacific Development Fund III formed
in 1994.
Summarized income statement information for these Partnerships, which are
accounted for by SMMP under the equity method, for the three months ended March
31, 1998 and 1997 follows:
SIIP
--------------------------
March 31
--------------------------
1998 1997
------------- ------------
Rental income $ 169,808 $ 275,936
Total revenues 169,808 275,936
Operating expenses 104,860 80,271
Net loss 136,367 12,056
UNAUDITED
9
<PAGE>
Sierra Pacific Pension Investors '84
Notes to Financial Statements
Page three
SCP SVP
------------------------- --------------------------
March 31 March 31
------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ -------------
Rental income $ 203,881 $ 177,225 $ 0 $ 141,806
Total revenues 203,881 177,225 0 141,806
Operating expenses 125,117 114,522 20,852 111,210
Net loss 52,473 101,608 20,852 268,897
4. PARTNERS' EQUITY
Equity and net income (loss) per limited partnership unit is determined by
dividing the Limited Partners' share of the Partnership's equity and net income
(loss) by the number of limited partnership units outstanding, 77,000.
UNAUDITED
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following Exhibits are filed herewith pursuant to Rule 601 of
Regulation S-K.
Exhibit
Number Description of Exhibit
- ------------ ----------------------------------
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report be signed on its behalf by the
undersigned thereunto duly authorized.
SIERRA PACIFIC PENSION INVESTORS `84
a Limited Partnership
S-P PROPERTIES, INC.
General Partner
Date: MAY 4, 1998 /s/ THOMAS N. THURBER
----------- ----------------------------
Thomas N. Thurber
President and Director
Date: MAY 4, 1998 /s/ G. ANTHONY EPPOLITO
----------- ----------------------------
G. Anthony Eppolito
Chief Accountant
UNAUDITED
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM SIERRA PACIFIC PENSION INVESTORS '84 MARCH 31, 1998 FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 16,978
<SECURITIES> 0
<RECEIVABLES> 99,862
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 86,976
<PP&E> 4,926,170
<DEPRECIATION> 3,604,663
<TOTAL-ASSETS> 10,547,842
<CURRENT-LIABILITIES> 157,324
<BONDS> 1,543,234
0
0
<COMMON> 0
<OTHER-SE> 8,847,284
<TOTAL-LIABILITY-AND-EQUITY> 10,547,842
<SALES> 121,168
<TOTAL-REVENUES> 176,702
<CGS> 0
<TOTAL-COSTS> 112,319
<OTHER-EXPENSES> 64,343
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,127
<INCOME-PRETAX> 42,462
<INCOME-TAX> 0
<INCOME-CONTINUING> 42,462
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,462
<EPS-PRIMARY> .55
<EPS-DILUTED> .55
</TABLE>
